The Telecoms

Friday, November 8, 2013

The
word Energy comes from the Greek ένέργεια (energeia) which means activity,
operation, while the word Electricity, which also comes from Greek, ήλεκτρον (electron) means amber, because electrical effects were produced
classically by rubbing amber. Since the antiquity, man has been attracted by
the electricity phenomena, but it was in the 19th century that it turned from a
scientific curiosity into an essential tool for modern life. Electricity was in
fact a major driving force of the Second Industrial Revolution, that is to say,
an important technology that contributed to mass production activity,
operation.Electricity
was then deployed over the territory of the industrialized nations, and the
grid grew to accommodate its increasing demand, turning up to become a
commodity. However, this growth was based on the business model introduced by
Thomas Edison, in which utilities owned the plants that generated electricity,
the transmission lines that carried it to substations, and the wires that
distributed it to customers. Despite of the waves of liberalization that
started in the 1980s, the grids didn’t improve their expanding capability, and
we have seen some serious blackouts affecting millions of people, such as the
2003 Northeast Blackout in the United States of America (USA), and the 2003
Italy Blackout – both caused by lack of reliability and ageing of the grid. It
is also a fact that during the first half of the 20th century, utilities had
unlimited access to cheap fossil fuels, and had no incentive to upgrade their
inefficient old plants. From the recent decades, we have been assisting to a
rise in consumption of energy from the so-called BRICS[1]
countries, and we can expect that consumption of electricity will further rise, and with that, the concern on the fossil fuels, and their impact on
the environment. With this, environmental concerns are also playing a very
important part on energy planning. One key measure identified to tackle the
transition to sustainable and low-carbon industry is the expansion of Renewable Energy Sources (RES), and more than that, its integration
into the electricity grid. Besides the environmental effects, what is intended is
to help solving the limitations of storage capacities, and at the same time,
being economically efficient.Thus,
the electric grid needs to accommodate the changes to meet challenges of
improved load control and increased generation from renewables. There are two
views on how to achieve those goals: one is the adaptation of the current grid
by means of conventional “Dumb Grid”[2]
so that it integrates a high share of RES, and the other view is to get there
by means of a more automated and integrated grid that brings intelligence using
information and communication technologies, and metering from generation to all
the final consumers. As for the second view, we are talking about Smart Grid
(SG), an electrical grid that incorporates Information
and Communications Technology (ICT) and Smart Meters (SM). The drivers for SG are several
and different, depending on the geopolitical domain we consider. For example,
main drivers for SG in USA are the ageing and security of the grid, while the
EU seems to be more motivated by the 20-20-20 objectives[3].
The SG is seen as a means (not an end) of achieving the goals of a global
energy challenge that countries face in the next years. Wherever these changes
are going to take place, its development will be part of a major change to the
way electricity is generated, transmitted, distributed and used, and like any substantial
change in national infrastructures, the costs will be challenging.

However, technology alone won't fix all the
concerns about the grid, as they are not mainly a technological problem – instead,
it relates to a whole system, where political gridlock, inefficient markets,
and shortsighted planning that have created those bottlenecks that cannot be
solved solely with millions of Smart Meters and ICT infrastructure. Without
further policy stability, appropriate regulatory incentives, and more
investment, may result in not realizing the Smart Grid, and consequently falling
behind in what can be a new global growth market and a source of prosperity and
jobs for years to come.

[1] BRICS is the title of an association of leading emerging economies,
arising out of the inclusion of South Africa into the BRIC group in 2010. As of
2012, the group's five members are Brazil, Russia, India, China and South
Africa. With the possible exception of Russia, the BRICS members are all
developing or newly industrialized countries, but they are distinguished by
their large, fast-growing economies and significant influence on regional and
global affairs. (Source: http://en.wikipedia.org/wiki/BRICS)

[2] “Dumb grid” is a term used to refer to the traditional grid, which
is seen as being based on limited information and leaving no real control for
consumers. A Dumb grid demands a large amount of physical infrastructure,
practically meaning more cables needed to be laid, because it will not be able
to rely on smart distribution of intermittent energy through ICT and therewith
compensate peaks in supply or demand.

[3] The climate and energy package is a set of binding legislation
which aims to ensure the European Union meets its ambitious climate and energy
targets for 2020. These targets, known as the "20-20-20" targets, set
three key objectives for 2020: A 20% reduction in EU greenhouse gas emissions
from 1990 levels; raising the share of EU energy consumption produced from
renewable resources to 20%; A 20% improvement in the EU's energy efficiency.(Source:
http://ec.europa.eu/clima/policies/package/index_en.htm )

Wednesday, October 23, 2013

Portugal planned the shutdown of analogic TV so that its population could receive the four existing open signal channels from TDT. This process was delegated to ANACOM (www.anacom.pt), the communications regulator of Portugal. ANACOM's responsability was to plan and supervise the change so that continuity of service was smooth with an accessible price. Shutdown was planned for March 2009 but it was approved only by June 2010 and TDT signal was switched on in 2011. The process was a deception for consumers, specially in the interior of Portugal where income is lower. Many citizens complained of misinformation regarding the decoding boxes and signal availability. The responsible for the implementation of TDT network was Portugal Telecom, the former Portuguese state comunications monopoly. In October last year, Sergio Denicoli, a researcher from Universidade do Minho stated that there were "strong signs" of corruption in the implementation of TDT in Portugal and that the process was planed so that it would not work. Portugal Telecom stated that it would take Mr. Sergio to court which in the end didn't happen. Many citizens complained that some technicians responsible for the TDT installation assistance recommended them the installation of MEO, a Portugal Telecom service that offers a triple-play subscription that includes TV. Some other countries in Europe decided to add more channels to their TDT emissions so that open signal offer was diversified; this would not directly compete with services such as MEO but would offer diversity to citizens - this didn't happen in Portugal where the broadcasted channels are the ones as in analogic signal. This week, DECO, a consummers interest presented a complain in a nacional court as a consequence of the massive complains from consumers. The regulator (ANACOM) already stated that it has done everything it should have done (with Portugal Telecom) during the process and remembered that DECO was ANACOM's partner in the process of informing the population. Coming back to Mr. Sergio's research, what he was rising was the possibility of regulator's capture, a situation that occurs when a regulatory agency, created to act in the public interest, instead advances the commercial or special concerns of interest groups that dominate the industry or sector it is charged with regulating. This is an interesting case that we will follow in the next days.

Portugal is a democracy since 1974. Regulation and Competition law in Portugal follows EU related roles and where cases are not solved by national authorities, complainers can turn to EU related institutions.

Wednesday, September 19, 2007

Thursday, August 30, 2007

On September 6th, the United States Department of Justice (DJ) submitted an ex parte filing regarding the regulation of the traffic over the Internet, in the context of what have been the so called "net neutrality" rules.

In the document, the DJ advices that the Federal Communications Commission (FCC) "should be highly skeptical of calls to substitute special economic regulation of the Internet for free and open competition enforced by antitrust laws", arguing that the proponents of neutrality propose marketplace restrictions could prevent, rather than promote, optimal investment and innovation in the Internet, having thus negative effects for the economy and consumers.

The Act of 1996, passed by the American Congress to "promote competition and reduce regulation (...) encourage the rapid development of new telecommunications technologies" is also mentioned as argument "against" neutrality.

The report refers to proponents of "net neutrality" regulation as failing to "show that a sufficient case exists for imposing the sorts of broad marketplace restrictions that have been proposed", and points three examples why neutrality has the potential to harm consumers: 1- By precluding broadband providers from charging fees for priority service could drift the entire burden of implementing costly network expansions and improvements onto consumers. 2- Mandating a single, uniform level of device for all content could limit the quality and variety of services that are available to consumers and discourage investment in facilities. 3- Proposed regulations could unreasonably limit the ability of broadband providers to manage their networks efficiently.

The ex parte calls the attention to "the increased usage and popularity of new services that are sensitive to delays in delivery (...) has increased demand for bandwidth. In response, broadband providers have made, and continue to make, significant investments in Internet infrastructure to meet rising demand and reduce Internet congestion". If we pick the analysis of the first post of The Telecoms, DJ is kind of aligned with the projection made in the Evernet scenario projected for Europe.

As a conclusion, DJ urges the FCC to exercise an adoption of rules that regulate the Telecoms sector.

As we know, one of the "fierce" proponents of "net neutrality" is the giant Google which does not own a physical infrastructure to carry its contents and services, and thus has to fight in the arena where Telecoms, IT, TV Broadcasters want to enter the business of each others. Google and other Internet companies have been accused, especially by AT&T and Verizon, of using their networks for free without any returns for them - which could configure a scenario where the infrastructure owners don't see any advantage on investing on new assets. On this subject, the DJ implicitly points that if neutrality was to happen, "that could force consumers (....) to bear the costs of maintaining and upgrading broadband providers' networks".

Google has been quite successful in creating (and in other cases by acquiring companies) products which are gaining momentum, such as GMail, Youtube, Google Maps, etc. All these products and services are using the Internet and MNOs networks to be carried.

During the last months, rumors of a Goggle Phone were spread in the news. Google is also in a race for spectrum which is to be free by 2009 because of DTT deployment. This can mean Google wants to provide their service using their own wireless assets.

Regarding the Google Handset, speculation points that GOOG wants to sell the cell phone and its own service plan - others talk about Google making a phone that transmits calls over the Internet rather than over cellular networks. However, these are just "Chinese whispers", but Google could for example buy air time in bulk from a carrier.

In what concerns the White space Google and others are fighting for, it has been a hot discussion. Google presents itself as a bidder in an upcoming auction of wireless spectrum and steer the creation of a new wireless broadband network. However, there's a condition, Google says it will participate if FCC would embrace its view on "net neutrality" - GOOG wants regulators to stipulate that the winner of the new spectrum gives consumers the freedom to use whatever mobile applications they desire on any handset they want; it also wants the winner to sell wireless services to resellers on a wholesale basis and let Internet-service providers interconnect with the network. Google had also made some trials/tests in the context of the White Spaces Coalition. This coalition consists of Microsoft, Google, Dell, HP, Intel, Philips, Earthlink and Samsung - it plans to deliver broadband access to consumers via existing "white spaces" in unused analog television frequencies. This is not good for TV Broadcasting industry which already launched an advertising campaign to fight against the white space use by claiming the devices to be used interfere with TV adjacent channels.

On the other front AT&T and Verizon, the bigger incumbents in USA, as expected are against Google (and there are rumors that Apple joined the race), on the grounds that the conditions are unfair to traditional wireless companies and would devalue the spectrum, depriving the government of billions of potential revenue.

Whatever the decision will be, there are some true facts - MNOs behave today in a quasi-monopoly market and disruption of wireless would be welcome for the final user and even for device manufacturers which in some cases need to make exclusive deals with MNOs. On the other end, Google is becoming the big storage of humans' records, rising thus concerns of privacy.

But one thing is for sure, from times to times the better is to shake the waves, shall they be new or old...

Wednesday, July 18, 2007

Let's say you have a lot of money to invest. Would you risk all your money in just one security? If you would, if that security has some high level of risk, either you really know what you're doing (and then you are lucky) or there's a great probability to lose money. The same can be applied, in some extent, to the product/service portfolio of your company - that is known. Classical examples are that for example Motorola didn't choose a single operating system for their phones - it was one of the first to join the Symbian with Nokia and Ericsson. However, as we know, Motorola also launched Linux and Windows Mobile handsets. So the question is, is Motorola lost and doesn't know what it's really good? The answer is: right the opposite! As in financial portfolios, diversification can be beneficial. Of course there might be exceptions (e.g., you are a very specialized company and that is your strongest asset).

So, why is it important to diversify? First if one of you product fails, you have a chance with the other; then you develop expertise in more than one technology.

Given this, a management of this is strategically needed. That is especially true in what concerns innovation. It's also known that a very small amount of innovation experiences becomes a successful product/service. The questions here are "when shall you get out of some innovation", "what partnerships shall you take part in", "how many new projects shall you support"? These are questions without a straightforward answer, but looking to some successful companies, many practices show us that companies follow more than one standard (e.g. Orange provides OMA IMPS messaging service alongside with Microsoft Messenger in their handsets), some companies create partnerships which will drop latter (e.g., Motorola founded Symbian and is no longer one of the shareholders), and others promote creativity (HP gave one day time to employees for their own projects).

Even if we look the way R&D is done today, you'll see that companies no longer sit their researchers alone in a lab - they create several webs where clients and providers give inputs on their requirements so that research is also a collaborative work. This is good, because sometimes researchers like to work too long and own their innovations, leading sometimes to overlook and spend too much time to unsuccessful projects.These paradigms need to be understood for R&D and innovation to be handled in a modern and efficient way. As someone one day told "marketing is too important to be in the hands of marketeers", maybe we can say "innovation is too important to be in the hands of innovators".

Thursday, April 26, 2007

What are the features you find more important to choose a handset? Shall it look nice and sexy, shall it have the cutting-edge technologies, or is it simply because it has a nice price? Most probably the answer will depend on who you are, but one thing is for sure, 70%-80% of the non-voice revenues in 2006 came from SMS service. This means beyond doing voice calls, most of the people use handsets to send SMS, and thus, sophisticated services such as TV broadcast and location services (just to mention a few) are not really being used by people. Given that voice and SMS are the appliances that people really use, why is the telecom industry still looking for a "killer application"? A straightforward and consensual answer is that voice revenue margins are continuously eroding and fresh ideas that keep costumers connected are needed.

As the mobile value chain is very fragmented, the industry founded some years ago OMA (Open Mobile Alliance) with the intent of creating interoperable applications. The number of applications standardized by this organization body is huge and it involves the latest advanced technologies. However, it seems adoption of these technologies is slow and revenues mobile operators get from them accounts for a very small part of the pie.

So what's the main "problem" with that? Are these applications expensive to develop or are network operators charging too much for the services they provide? Maybe the answer is both! Some researchers point that mobile phone industry is becoming very similar to the PC industry. As we know, (and as in PC), companies are evolving from vertically integrated to integrators of parts (which are made from other more efficient companies). This is true in most technologies when interfaces between parts of a system become standardized and a single company is able to take advantage of economies of scale and expertise by doing just one part of the system. These kinds of companies are already part of the mobile value chain and some of them perform very well. Regarding the rates applied by MNOs, these new services are not deployed at a low cost, as companies cannot jeopardize themselves. However, it's becoming clear that network operators own an infrastructure that can carry all these applications' bytes. Some experiences are being held - for example, this month in Frankfurt you could subscribe a T-Mobile service that enables sending an MMS to e-mail addresses by a flat rate of €10. Thus, new price structures and utilization patterns will drive the adoption of mobile services.

However, what are the main forces that make people choose their mobile phone? In the developed countries, where purchasing power is higher, people tend to buy handsets for what they look like and not for the features or "complicated" applications they run. The top example is the Motorola RAZR which is a slim phone with an emphasis on design. Another example of this is the partnership between some mobile manufacturers and style brands - for example Motorola teamed with Dolce & Gabbana, and Vodafone with Ferrari. Another example could be Vertu (manufacturer of luxury handsets fully owned by Nokia) that are hand-crafted and where design and luxury are the differentiation factors.

So, maybe there is not a perfect approach but several approaches and the winner, as ever, is the one which delivers what the customer wants, because that... is sexy!

Wednesday, April 11, 2007

Most of us have already heard about Network neutrality; there are several definitions for it, but the basic principles are: networks that don't favour some destinations over others, or classes of application (eg WWW) over others (eg online gaming or VoIP).(...)After making huge investments on building FTTx new networks across the US, companies such as AT&T and Verizon point their fingers to big internet companies by saying they are using their networks for free without any return for those carriers:

•AT&T CEO: “Google, Yahoo! are getting a free ride on AT&T expensive new network – we have spent a lot of capital and we have to have a return on it!”

•Verizon CEO: “Google, Microsoft and other providers ought to share the cost!”

(...)On this discussion there are different positions to be taken - some argue networks shall be neutral and others don't. Arguments on the net neutrality side are accusing AT&T and Verizon for blocking innovation for start-ups and small companies.(...)Some opponents to net neutrality, put the question on a different angle; Odlyzko, University of Minnesota: “What makes them think that they are going to charge Google, as opposed to Google charging them?”(...)However, this discussion might not be new, fast broadband connections already cost more than slower, both for consumers and business. Given that carriers had put big money on new fast networks, on thing is for sure, or telecoms charge subscribers more or they pursue new business models where big internet companies and content providers pay part of the bill.